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Edited version of private advice
Authorisation Number: 1052002391197
Date of advice: 6 July 2022
Ruling
Subject: GST - reduced credit acquisition of IT processing services
Question 1
Are you making a reduced credit acquisition listed in section 70-5.02 of the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations) under the IT outsourcing agreement?
Answer
Yes, you are making a reduced credit acquisition listed in table item 2 of subsection 70-5.02(1) of the GST Regulations under the IT outsourcing agreement.
This ruling applies for the following period:
6 July 20xx to 1 March 20xx
The scheme commences on:
2 March 20xx
Relevant facts and circumstances
You are an Australian public company.
You are registered for GST.
You currently hold a license which allows you to carry on banking business in Australia, including accepting deposits from the public.
You have developed a portfolio of banking products and services.
You entered into an IT outsourcing agreement with an IT service provider.
Under the IT outsourcing agreement, the IT service provider is responsible for providing you with IT processing services rather than the mere acquisition of processing capacity.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Div. 70
A New Tax System (Goods and Services Tax) Regulations 2019
s 70-5.02
s 70-5.03
Reasons for decision
As these are processing services to which item 2 of the table in subsection 70-5.02(1) of the GST Regulations applies, you are making a reduced credit acquisition under the IT outsourcing agreement.
For the purposes of subsection 70-5(2) of the GST Act, subparagraph 70-5.03(c) of the GST Regulations stipulates that you are entitled to reduced input tax credits at the rate of 75% for your reduced credit acquisition.